5.5% Discount Does Not Sound Like a Deal

The Sarasota Association of Realtors recently came out with their monthly statistics. If you are interested you can read them here. It provides some valuable information and statistics on the Sarasota Florida real estate market. Aside from fabulous news about January pending sales surging you will see the statistic sale price vs. list price which is currently at 94.5% or a 5.5% discount.

5.5%? Is that all? If you read the national news about Florida real estate then you are probably expecting to get a much larger discount than 5.5%. Most buyers expect to get 20-30% off of list price. It does happen but more often than not they are getting far less.

Don't judge "the deal" by the size of the discount

Awhile back I was talking to a person looking for a Siesta Key condo. There was a short sale condo listed for $499,000 that was previously under contract. The buyer got tired of waiting and walked before the bank approved the short sale. The bank ultimately approved the sale at $470,000. The unit two doors down with the same size, condition and view sold 6 months ago for $635,000.

Despite a similar unit selling for $635,000 the buyer I was talking to did not have an interest in the condo at $470,000 because there was only a $29,000 discount from the asking price. He was judging the quality of the deal by how much is taken off of the asking price.

Remember, sometimes these asking prices are pulled out of thin air. Sometimes a Realtor and the seller will put 5 hours of work into this decision and sometimes they will only invest 5 minutes.

I have a feeling if the asking price was $600,000 and the bank approved price was $470,000 then the buyer would have been more interested because of the "perceived deal" and "large discount" from asking price.

What Kind of Discount Can I Expect?

I went to the Mid Florida MLS and pulled up the last 3 months of sales in Sarasota county. According to our MLS there were 2,105 properties sold in the last 90 days in Sarasota county with an average sales price/list price at 93.5% which is slightly lower than the 94.5% discount from the January statistics but the difference is negligible.

Here are the discount broken out by price range:

As you increase price the discount becomes larger. The average discount for properties over $1 million was 14%. Again, these are average numbers. If you are in competition with another buyer for a home it is iikely that the sales price will be much closer or even over asking price.

One thing is for sure. Despite the bad press Florida receives in the national news the majority of the properties selling do not have a 20%-30% discount from asking price.